Strategy

It’s not often that you hear of a tech startup from South Africa who chooses to build and deploy their product to Kenya first. In fact, I’ve never heard of such a thing. However, that is just what is happening with Mocality, a mobile and web-based business listings and directory application built for Africa.

Mocality’s job: create a digital platform that makes it easy for business owners to promote and expand their businesses in Africa.

“As a business owner, you get free SMS, a contact list, a free mobile website and a free mobile business card.”

Mocality represents this change in the paradigm that we’ve seen coming on for years in Africa. An application built agnostic to the client platform (mobile phone or PC), where data is fed into whatever you use in a meaningful way. Where the mobile usage is just as rich as the PC use.

In fact, they’ve studied usage of mobile phones on their system and have seen the usage of smartphones to be so negligible as to not matter. As CEO Stefan Magdalinski says, “This is the Mocality reality: RIM, Android, Apple are 2% of usage.”

About the Team

Successful startups generally have great leaders, Mocality has that. Stefan Magdalinski (@smagdali) is a seasoned web veteran and entrepreneur, co-founder of Moo.com and an early entrant into the programming space in England in the mid-90′s, and just recently relocating to South Africa for Mocality. They have plenty of funding, from MIH, a subsidiary of Naspers Group (who has been eying Kenya with recent forays such as Kalahari and Haiya).

I’ve met with Stefan in Kenya and South Africa, and I’ve also had the chance to meet some of the members of his team here in Nairobi. The impression that I’m left with is that this is a serious startup, with plenty of funding and a great vision and a strategy put in place to pull it off.

How it Works

Mocality is built for Kenyan businesses that don’t have enough money (or value to gain) to advertise in a print directory.

Again, a paradigm shift. They’re saying that they don’t care about the big end of the power law of distribution (the big companies), only the longtail (small, marginalized businesses). This is apparent in the images below of their typical user:

• SMS, WAP & Web tools (now J2Me, iPhone)
• Businesses can self list
• Geo-coding All business locations
• Map view of business
• Business toolkit:
1. Add customers & suppliers
2. Send bulk messages (400 free SMS monthly) (but with anti-spam controls)
3. Send mobile business card
4. Add details (e.g. Menus, Special Offers)
• Website, google optimised (white hat only)

Important to business owners in this segment is that the platform is free. Services will be added to the platform over time that business owners can pay for, but currently the only cost to them is data or SMS usage on their own mobile phone to access Mocality.

Scaling using the Crowd

Initially, the Mocality team walked all over Nairobi getting businesses to put their listings on the platform. They were successful, and in about 6 months of hard work were able to get approximately 11,000 businesses listed. That’s good, but barely puts a dent in the number of companies operating in this city.

The team then launched a crowdsourcing option, where they experimented with allowing anyone in Nairobi to add their own (and other’s) businesses to Mocality, and they got paid a bounty to do so. Within the last 6 weeks they have as many listings entered as the previous 6 months. If you live in Nairobi and want to become an agent, you need a WAP-enabled cameraphone and only need to visit http://www.mocality.com/money.

That’s impressive, but the impact is even more apparent when you look at the visualization:

If you have a business in Nairobi, you can get your listing onto it by visiting www.mocality.com email to info@mocality.co.ke or SMS callme to 2202 from within Kenya.

I’m sitting at the iHub this morning, after just having given my welcome to the 40+ Nairobian hackers who have descended upon the place. They’re here to take part in the global Random Hacks of Kindness (RHoK) hackathon to develop tech solutions to pressing needs in crisis and disaster response.

It should come as no surprise that Nairobi’s technorati are well-versed in mobile solutions, that’s quickly becoming a competitive advantage in this city. So far we have groups coming up with solutions for amputee registration via SMS and USSD, An SMS solution to create distress texts, improvements to people finder apps and tracking of mobile payments.

Keep up to speed

• My Pictures
• Live stream
• Twitter, follow #RHoK or @iHubNairobi
• The iHub Blog

This event goes through Sunday afternoon, it’s a full 36 hour hackathon. Watch as the devs in Kenya work with their counterparts in Australia, Indonesia, Brazil, the US and UK. Keep an eye out on the above resources to see what comes out of Africa!

A lack of regulation, or at least a more relaxed regulatory environment, have been directly responsible for Kenya becoming a hub of innovation, specifically in the mobile payments and banking space.

The gorilla in Kenya’s room is Safaricom. The posted a Ksh 21billion pre-tax profit yesterday, citing growth and profits in almost all areas, including 137% growth in data services, which they see as the next big cash cow.

Safaricom has directly benefited from this environment and their savvy marketing and business moves have left others in the dust. Businesses should be allowed to make profits and smart strategic decisions rewarded by profit and market position should be expected and encouraged – else why do they do it?

A couple of weeks ago new regulations, put together last year by the CCK, were floated by the Monopolies and Prices Commission. These rules were intended to curtail the massive growth of firms like Safaricom and the ScanGroup, to the detriment of competitors and the market as a whole. Naturally, the only firms upset with these rules were the incumbents.

Just yesterday, Dr. Ndemo, the permanent secretary for information and communications decided that Kenyan professionals who drafted these new rules weren’t professional enough and called in consultants from the United States to review them. While it is true that the Monopolies and Prices Commission is weak in ability to fulfill its mandate, this move comes off as an appeasement by Dr. Ndemo to Safaricom as it came out on the same day that Safaricom was having it’s annual shareholder’s meeting. It makes you wonder who dances to whose tune.

Both sides have good points. Smaller firms do have an uphill battle, not only due to their size, but also due to the unfair practices that larger firms tend to busy themselves with in Kenya to keep the competition at bay. However, large firms also have point. If they are playing fair, should they be punished for being better than everyone else?

Too much regulation in a sector can cripple a country’s innovative business growth, especially technology (see South Africa’s banking rules…). Dominant players have the same effect.

Maybe, instead of adding unnecessary regulations, governments should look to truly and strongly punishing unfair and dirty practices that are already on the books. A 200,000 Ksh ($2,500) fine is the most that Kenya’s monopoly commission can do, and it’s laughable at best.

Just a week ago I was in Cape Town talking about how entrepreneurs in Africa are looking at the prepaid mobile phone market and are trying to solve for the cost structures for data provided by the mobile carriers. Who knew that internet giant Facebook would beat them to it?

This week Facebook launched 0.facebook.com, where they worked out deals with 50 mobile operators in 45 countries to either zero-rate data costs coming to that URL, or paying that data cost themselves. This means that anyone, even those with no airtime on their mobile phone, can still take part in Facebook.

“Thanks to the help of mobile operators we collaborated with, people can access 0.facebook.com without any data charges. Using 0.facebook.com is completely free. People will only pay for data charges when they view photos or when they leave 0.facebook.com to browse other mobile sites. When they click to view a photo or browse another mobile site a notification page will appear to confirm that they will be charged if they want to leave 0.facebook.com”

Interestingly enough, 5 of the 6 largest Facebook using countries in Africa do not have access to this service yet: Morocco, Nigeria, South Africa, Ghana and Kenya.

Why this matters

What has happened is that Facebook, even with all of their problems and questionable ethical moves on privacy issues, still have a great strategist with a global perspective in their midst. What they have realized is that the only way to increase penetration in the developing world is to cover the data costs for their users (or, if lucky, snooker a mobile operator into not charging them for it).

I pay for someone to visit this blog. I pay my web hosting fees and that means that you can visit it for free. Almost. Unless you’re on a free WiFi service you still have to pay your ISP to connect to the internet. This is akin to me paying off your ISP for when you visit my website.

It’s a big deal, and I think we’ll see a lot more of this happening. It raises the bar for everyone else. If you want to play in this league, you now need to pay off the mobile operator for the traffic that goes your way. Meanwhile the mobile operators laugh all the way to the bank – it’s a huge win for them, and a big score for mobile web consumers in the developing world.

Everyone wants to compare any up-and-coming tech city in the world to, “The Next Silicon Valley”. That idea is dead on arrival, yet we’re seeing many a reference to it in the media for places like Nairobi and Cape Town.

Paul Graham’s essay states this best (please, read the whole piece):

“What it takes is the right people. If you could get the right ten thousand people to move from Silicon Valley to Buffalo, Buffalo would become Silicon Valley.”

A model for African startups

Yesterday I spoke at Mindspeak, a monthly meeting in Nairobi where people in the business and tech fields talk about what got them to where they are. During the Q&A session after I spoke there was the recurrent question and comparison between what we’re trying to do with the iHub and how we see the increased critical mass in the Nairobi tech space, and if that was going to make us the next Silicon Valley.

That’s the wrong model for us. Instead, we should look closer at the Israeli model.

“Very often, local high-tech startups can’t find the funding here,” Mr. Glaser said. “They get funding elsewhere and ultimately move their locations from here to be closer to their investors.”

Israel already has a culture of innovation and entrepreneurship, which leads to a strong startup culture. Due to geographical and political constraints, startups that create high-tech products and services are forced to look at their growth strategy early on. When a company starts gaining traction, they spin out their executive and parts of their operations to places like Silicon Valley, New York, Cambridge, etc, while maintaining parts of their operations in Israel.

We’ve seen the same with a South African tech firm. Yola (old name: Synthasite) moved first their executive team, then part of their operations, to San Francisco. Shortly thereafter, they raised an amazing $20m.

Of course, the Israeli Model, requires more than just up and moving half of your startup to Silicon Valley. That’s a simplified formula. However, it does serve as an indicator for what we should be looking at here. Instead of trying to grow the same ecosystem that took decades to develop in California, we should look at what works for us.

Key ingredients needed:

• A network of investors, mentors and connectors in the bigger tech hubs of the world that help incoming African tech companies and help them take the next step. Most of these should be well-placed African diaspora.
• A policy and legal framework in African countries that allow them to build and succeed/fail quickly so that they can take that next step globally.
• Seed capital and incubation options for early stage prototypes and business testing in-country.
• Teach entrepreneurship and leadership within the education system, especially at the university level.

You’ll note that none of these items can be done by just one entity, it takes a concerted effort by multiple parties, including investors, academia and government in order for both a high-tech startup culture to come into being and for success beyond a countries borders to take place.

Certain cities in Africa have the ability to pull this off, including Nairobi, Johannesburg, Cairo, Accra and Lagos. Others have a chance too, but these 5 have the critical mass that makes it more possible, though none of them are there yet.

I’ve written a couple of times about the lack of seed funding in Africa, and how to find the entrepreneurs to fund if you did have seed capital. We’re starting to see a few angel investors like Sean Murphy of Chembe Ventures making their way around the continent, but they are not nearly enough to fulfill the capacity of ideas and individuals who need startup capital.

Crowdfunding

Just this week the CrowdFunding South Africa site was launched (look for them at SXSW this week in Austin), working off the theory that, “South Africa cannot compete in the global online sector if it isn’t funding start-ups at the beginning stage.” Their plan is to do this by getting:

“1000 people get together investing R1,000+ each by pooling the money into the Crowdfund.”

Seed funding is risky, and the idea of Crowdfund is to distribute that risk over a number of people thereby reducing it for everyone. Their goal is to invest 50,000-100,000 Rand in 10-20 “excellent ideas”, and also provide legal advice and contracts, designers, specialized developers, bandwidth, hosting, office space and running costs, mentorship and time saved.

This idea is similar to what Ben White at VC4Africa is thinking about, basically a “Kiva on steroids” as Bill Zimmerman puts it. A way for you to invest in people and projects with larger sums of money and greater risk and returns than on the microfinance investing sites.

Finding the Real Tech Entrepreneurs

Both the Crowdfund and VC4Africa initiatives are excellent steps in the right direction, as they both provide platforms that allow less-knowledgeable investors (of tech in Africa), and deeply involved African tech investors alike, to get involved without too much risk at one time. There remains one issue to be solved though, and that is finding the entrepreneurs to invest in.

Any VC worth their salt will tell you that they invest in the people behind good ideas, not just the product/service that the entrepreneur is trying to create. So, how do you find these individuals? It’s generally through your network, people you trust, that serve as a filter to guide you towards the promising ones. That’s the same in Africa as it is anywhere else, yet here in Africa, there are fewer of these trusted intermediaries who act as filters (especially for international capital), than there are in the US or Europe.

In a meeting this last week of the people behind Limbe Labs (Cameroon), Appfrica Labs (Uganda), the iHub and the iLAB (Kenya) we discussed how these spaces could act as that type of a filter for investors and funds. Each of us sees more young tech entrepreneurs every day, and sees these individuals consistently, than most any other single person could by themselves.

Could these labs, which are now showing up all over Africa, be a way for entrepreneurs to make themselves known, show their stuff, then be introduced to the funds and investors with a greater level of confidence than normal?

iHub – Nairobi’s Innovation Hub for the technology community – is here! It’s an open space for the technologists, investors, tech companies and hackers in the area. This space is a tech community facility with a focus on young entrepreneurs, web and mobile phone programmers and designers. It is part open community workspace (co-working), part investor and VC hub and part incubator.

A number of us in the Nairobi tech community have been discussing the need for a physical nexus for the tech community here for a couple years, so it’s great to finally be so close to uncorking the bottles and celebrating a big step forward for all of us.

iHub opens on March 3, 2010!

Here’s a rough video of the iHub. A first-look at the space, before any design or wiring is done:

[Note: my apologies for the video quality, it was taken with my phone.]

Background and Info

The iHub will have a redundant 10Mbs connection, hardwired and WiFi, and it’s freely available to any tech person in Nairobi to use once they become members. Membership is free, our only requirement is that you are indeed involved in the tech space as a programmer, web designer or mobile application developer.

Data connectivity is the most important aspect of the iHub, but after that comes a fresh design and an atmosphere that is conducive to techies getting cool stuff done.

Finally, we’re putting our networks into place to give special access to the entrepreneurs and startups who need space to meet with VCs, seed funders and local businesses. We’re trying to create the place where seeds are planted and are easily found by the people with money to help them grow.

A Blank Canvas

The iHub is what we as a tech community make it. It is a blank canvas, a big open room with a great view and wonderful location, but still an empty room that needs some input from people within the community to design, and create a culture around.

What part are you going to play?

• Want to have bragging rights on being the logo designer for the iHub? There’s $500 (38,000 Ksh) up for grabs at the iHub logo contest!
• Have a penchant for design, want to help layout the floor plan, pick the wall colors or design the signage?
• We’re wiring this place with the latest and best data connections in Kenya. Can you help us make sure the network is sound?
• Good at creating intranets for fast and easy file sharing of 1gb+ downloads like the Android SDK? Want to help us build that?
• Maybe you’ve got great business connections. Will you help us connect the iHub and the people in it to the business community?

iHub Location

The new iHub’s location is going to be on the 4th floor of the new Bishop Magua Centre on Ngong Road (directly opposite the Uchumi Hyper). It’s an amazing location, with quick access to public transportation, food and the rest of town.

View iHub – Nairobi’s Innovation Hub in a larger map

Community Involvement

I’ve been working closely with a couple of people from the community to find a place and get some basic items squared away. This advisory group is made up of individuals with a long standing presence in tech locally, including:

• Riyaz Bachani, CTO of Wananchi
• Josiah Mugambi, Co-Founder of Skunkworks
• Rebeccah Wanjiku, Tech reporter and entrepreneur
• Conrad Akunga, Blogger and Software Manager
• Erik Hersman (me), Tech blogger, Founder of AfriGadget and co-Founder of Ushahidi

As mentioned earlier, there are a number of things still to be done, and we all need to band together in order to make this space what we hope it will become. Your ideas and drive will make the iHub into the space to be in all of East Africa for tech-related activities.

If you would like be involved, leave a comment below.

If you follow AfriGadget, you’ll know that this summer I spent some time testing some new bags made by combining flexible solar panels from the people at Portable Light with the top-notch bags made by Timbuk2 in Ghana and Kenya over the summer. The whole initiative was put together by Pop!Tech, and it’s called the FLAP (Flexible Light and Power) bag.

The FLAP bag is still very much in its testing phase. What I was doing was alpha level, today more people are getting access to the bag and will help with beta testing in more places. This is good. It means that the team behind the project are not just rushing something to market to take advantage of the buzz, but are really trying to get it right.

Some of the suggestions from the African users can be found in the Fast Company article I wrote last week, but there are more coming in too, from South America and an Indian reservation in the US.

A few suggestions from African users

• The American-style Timbuk2 bags were generally thought of as too large
• Electronics need to be put into a more rugged case to survive the beatings that they’ll take in Africa
• People wondered if there was a way to hide, or cover, the solar panels to disguise what the bag was – for security reasons
• There was a general feeling that there was more use for portable light and power in rural settings rather than urban
• The ability to remove the solar components from the bag was genius
• The tailors wanted to make their own designs, and wanted access to cheap components to experiment with, and then sell

Testing, Local Relevancy & a Challenge

One of the most compelling things that happened on the trip was my interaction with tailors. I would give them a bag, but also give them the raw components and challenge them to make a bag of their own design, using local materials that they thought would be right for them, or right to sell in their market.

The bag above is my favorite customized bag design, it’s a smallish backpack that was made by Stephen Omollo in Nairobi. There are others though (see them here), and these creations serve as an indicator of the desire to own the technology. To make the technology relevant to specific local needs.

What this left me with was a nagging thought – that I was the wrong person to do this testing project. Sure, AfriGadget connections make me and the other editors a likely vector to do this, but that It was Timbuk2 that needed to be out in Africa with us. (I’m letting Portable Light off the hook, because I know they already do this)

Luckily, I’m here at Pop!Tech with the team from Timbuk2 and the team from Portable Light. I’m inviting them out to Kenya to actually get on the ground with these tailors and people who understand the pulse and cultural usage norms of the clients that they serve locally. With a little luck, we’ll get even further with the project, seeing a true partnership across two continents.

A big thank you goes out to my colleague Henry Addo in Ghana and David Ngigi in Kenya for their help with both videography and the interviews.

I’ve spent the last couple days in scenic Salzburg, Austria with 20 other people from both traditional journalism and new media backgrounds. Our goal: discuss strategies for more effective engagement and investment in “tomorrow’s media“. There are a mixture of organizations in the room, some established and others start-ups, like myself representing Ushahidi.

One of the questions posed, and which I’ve been ruminating on, is “when do you need funding?” (At this particular meeting, we’re talking grants primarily, but this applies to traditional seed and VC funding as well.)

Invest in Doers not Talkers

I don’t think it’s as early as most people think. There are a lot of people out there who claim they need funds in order to build a product. I disagree. Your first job is to build it. It might be in your nights and weekends, but that’s to be expected.

Yes, at a certain level you need funding that allows you to live, feed yourself and grow a business, but that’s not until you actually have something to show. Why would you expect someone to pay you money for a good idea? There are good ideas everywhere, but few examples of great execution upon these ideas.

A great presentation, Powerpoint or speech will get you a long way, and the ability to communicate is essential in both getting funding and getting user adoption or partners to work with you. However, nothing sells a good idea like a working product.

Whether it’s building a prototype, like we did with Ushahidi in Kenya, or a couple guys in a garage creating a new search algorithm and having to shop the product of that research around before they find investors, it’s too be expected that the work comes first, the funds second.

Growing

When is funding needed then? It’s needed when you have a product and it shows potential for success. Where you can talk to smaller investors who can support your work a little longer so that it can be refined and grow into something that has a real chance to make a difference, make money or both.

The second level of funding is about scale. It’s when you have a proven product that already has some success and needs more than it’s current cash-flow, or personnel, to take it to make a broader impact.

The term arbitrage traditionally refers to taking advantage of the price differential (the gap) between two or more markets. One example is how search engine marketers use arbitrage to make money off of Google Adwords with keyword buying and landing pages. Another is when traders take advantage of differences in exchange rates on currencies in two separate markets.

Is there technology arbitrage in Africa?

Tucked away in a blog post on Calestous Juma talking about the future of African communications, Ethan Zuckerman states:

“The spread of connection infrastructure into Africa now points to the need for devices that can access the internet, content to be delivered and applications. These, in turn, point to the need for institutions, laws and policies to regulate this space, which are currently lagging far behind the technology.“

We all like to discuss the technology gap in Africa, which is this space between those who have access to technology and can use it (the West) and those who do not (Africa). Does this create the environment to take advantage of technology arbitrage?

From a certain perspective that can all seem very bleak and depressing. From another, it smells like opportunity.

This time and knowledge lag between government “institutions, laws and policies” that Calestous Juma and Ethan are discussing is just the sort of gap that allows arbitrage to happen. You should be able to turn the lack of technology in one place, or at least information, compared to the other to your advantage.

Put another way, when a government is too slow, inefficient and technologically incompetent to keep up with the rest of the world, what happens?

I think we see the answer in a number of places already, not all of them savory. We see this in business executives who corner a market, like we’ve seen with Safaricom in Kenya, or the notorious 419 scammers in Nigeria. We read about it when Egyptian youth use Twitter to broadcast police brutality, or when Zimbabweans send MMS images of completed ballot counts from voting precincts in advance of those trying to perpetrate fraud.

Two main groups seem to take advantage of this: businesses and activists.

The natural inclination of the market is to leverage these gaps and inefficiencies, to create opportunities out of the void, that technology can often overcome. The best businesses in our current era are built to do this as are the activist groups with the greatest impact.

[Authors note: I've made up this term "technology arbitrage", but I couldn't think of a better way to describe what I've been thinking about. Speaking of which, I've been muddling this over in my head for a week and just wanted to air it out to hear other's thoughts.]

We’re never good enough when it comes to speed, stability or simplicity of our mobile and web applications. This is a three-part series where I unpack my experience building apps on each of these subjects. It’s not just for those of us working on Ushahidi, these are the three most crucial abilities of any web or mobile application.

Let me tell you a personal story:

Libera, March 2009

I’m sitting, sweating in the sweltering heat of a Monrovia cyber cafe, I have my notebook out and my am watching the clock. My goal is to see how fast I can load up the Ushahidi home page for the Democratic Republic of the Congo, it has a map, timeline and list of recent events tracking the current level of unrest in the country.

It’s not looking good. As I look around, waiting for the page to load, I count 8 others in the room – 6 of which have fired up stuttering and unusable Yahoo and Skype video chat windows. Why this is the channel and usage of choice, when it so obviously doesn’t work, I cannot answer. But this is reality, and if we expect ordinary Africans to use our application, we had better make sure that it loads up relatively fast on the low-bandwidth, shared internet connections that proliferate across the continent.

Utter failure. After 20 minutes painfully watching the page load byte by byte, I give up. I quickly type out a message to our team, imploring everyone to streamline this “fat, squeeling pig of a page”. Peppering them with questions… Can I buy some caching please? What can we do with this map to make it not kill the load? Can we get rid of 75% of the images on the page? Do we need to redesign this from the ground up?

Granted, Liberia’s internet situation is worse than almost any other on the continent. Especially when it comes to the grinding halt you see in the cyber cafes during the daylight hours as the local population piles on at the same time, completely overwhelming the limited satellite connection. That’s no excuse though. Ushahidi is built on the idea that the lowest common denominator, whether it’s PC or mobile-phone based access, will work. The PC-side is clearly failing.

Worst of all, my patience is short, Liberia is pissing me off with the heat, humidity, lack of bandwidth and no electricity grid. Objectively, this is the perfect state to be in, I am now able to come up with a solution for normal users in Africa.

What other’s know

Speed… if there’s only one thing that you do with your application, make it faster. No, it’s not fast enough.

This isn’t news to anyone, or it shouldn’t be. For years the major web sites around the world have known this and have been building for it. Mozilla, Amazon, Google and Facebook are all aware of just how critical speed is to their success. It boils down to attention threshold and what we, as users ourselves, are willing to put up with.

There is no area in which our team has felt more pain than in trying to speed up the page loads of our apps. Maps tend to be page killers by themselves. Once we add multiple calls to the database we start to get some truly agonizing speeds. It’s a constant pressure that sits on every one of our development cycles, and for which we dedicate a great deal of energy.

User experience research needed in Africa

One area that hasn’t seen enough true user experience testing is Africa. We know that internet speeds are slower, sometimes by orders of magnitude. I’ve got a lot of questions, more than answers at this point. Should we cut out the maps and all images? What’s the true cost of a page load +/- 7 seconds? What is the real value of maps in Africa compared to the West – do they matter?

Jessica Colaco is a top-notch programmer who has shifted to doing research in Kenya. I hope that she, and others like Eric Osiakwan and his team from Internet Research in Ghana, will help us dig out these answers. More than that, I hope they will help us ask the right questions.

How do you find the entrepreneurs and innovators in Africa who need investment funding to scale?

Agosta Liko - web entrepreneur in Kenya

That’s the question I was most intrigued by on my panel today at SoCap with Emeka Okafor, Nii Simmonds and Ashifi Gogo about identifying opportunities for innovation in Africa.

There are really two big issues at stake. First, how to find the right people. Second, what funding level is needed.

Boots on the ground

You’re not going to find the compelling African entrepreneurs while sitting in an office in the US or Europe. It’s only by spending significant time on the ground in the countries you’re wanting to invest in that you find the people you need to know. It’s there that you get past the first-level of non-expert opportunity profiteers and attention seekers and find the people who actually do the work.

Two examples:

1. AfriGadget is a blog about finding interesting stories of African innovation. It’s not always easy to come up with the stories though. You have to look hard, teach yourself to see things, in order to find these extraordinary individuals. Without the great blogging team and the people sending in stories from the ground, we wouldn’t have anything.
2. I grew up in Nairobi, yet it took me a solid two years of meeting people and networking within the city to get beneath the surface and find the people with the talent and drive to create actual businesses.

It’s generally not cost-effective for every funding source to have their own person canvassing the continent. The question then becomes, how do you find the trusted intermediaries who know the real story on the ground, know the players and can spot the talent?

The seed (angel) funding gap

Most of the individuals with the skills to create their own businesses in the high-tech space are working for large NGOs and multinationals. Why? They got to a place in their life where they had to make the choice of going out on their own, armed with a good idea and no hope of funding, or putting food on the table. This is similar to entrepreneurs worldwide, however in Africa the gap between success and failure is a lot less forgiving and the choices are a lot fewer.

Most of the funding available for companies in Africa comes through loans, debt financing. It’s mostly used in SMEs at the medium-sized level. There’s a gap, and that is seed funding. There are very few opportunities to get equity-based funding, especially at the levels where most entrepreneurs starting off need it. This is the $10-300k range.

Who funds them? There are a few organizations internationally who run business plan competitions with money prizes, others that fund a few startups each year (TechnoServe, Kuv and Acumen come to mind). There are also some local people and organizations that do some of the funding (as was the case for Agosta Liko pictured above), but it’s very hard to come by even within Africa’s most advanced tech/finance cities (Nairobi, Johannesburg and Accra).

Who else is out there?
How can we bridge this gap?

A couple weeks ago I had a discussion with President Obama’s New Media team, where we talked about what they might do to reach out to ordinary Ghanaians on his trip next week – which will culminate in his speech in Accra on July 11th. There is a lot of excitement in Africa around Obama, and this trip is going to set the continent humming.

WhiteHouse.gov/Ghana isn’t live yet, but on July 11th, it will become available. They are going to stream the talk at whitehouse.gov/live.

It’s a fairly interesting initiative to undertake, with a slew of problems, as you try to engage with as many individuals in an open travel campaign as possible. At the same time, you know that any channel you open up will get absolutely flooded with incoming comments, questions and spam of every sort. In the end, the team decided that Radio, SMS, then Facebook would be the primary new media access points – and in that order.

Radio, SMS and Facebook

Radio is still the number one communications medium across Africa, and Ghana has a particularly vibrant and active one with a lot of local and national community interaction.

As everyone knows, mobile phone penetration has grown at an explosive rate in Africa, this means that SMS is a fairly democratic means for getting feedback from people of every demographic across the nation. (Funnily enough, not available to US-based residents – more below on that)

Lastly, there are no major homegrown web-based social networks in Ghana, and like many other countries across Africa Facebook has a decent amount of penetration. In Ghana, it’s at 100,000+, so it makes the most sense for the new media team to engage and interact without splitting their energy over too many services. Having Twitter on as a backup is natural, as there will be a great deal of chatter there as well.

The details (from the White House)

SMS. We’re launching an SMS platform to allow citizens to submit questions, comments and words of welcome (in English and in French) . Using a local SMS short code in Ghana (1731) , Nigeria (32969) , South Africa (31958) and Kenya (5683), as well as a long code across the rest of the world*, Africans and citizens worldwide will be encouraged to text their messages to the President. SMS participants will also be able to subscribe to speech highlights in English and French. Long numbers for mobile registration pan-Africa: 61418601934 and 45609910343.

This SMS platform is not available to US participants due to the Smith Mundt Act (The act also prohibits domestic distribution of information intended for foreign audiences).

Radio. A live audio stream of the President’s speech will be pushed to national and local radio stations during the speech. After the speech, a taped audio recording of the President’s answers to the SMS messages received will be made available to radio stations and websites. The President hopes to answer a variety of questions and comments by topic and region. The audio recording will also be made available for download on White House website and iTunes.

Video. The speech will be livestreamed at www.whitehouse.gov/live. The embed code for this video is available so you may also host the livestream on any Website.

Online chat. We will host a live web chat around the speech on Facebook (it will be at http://apps.facebook.com/whitehouselive). The White House will also create a Facebook “event” around the speech wherein participants from around the world can engage with one another. A Twitter hashtag (i.e. #obamaghana) will also be created and promoted to consolidate input and reaction around the event.

Obama talks about his upcoming trip

Part 1

Part 2

Reading about the newest feature in Gmail, called “Inbox Preview” from Google has made me quite happy today. You see, it’s got a lot to do with the “If it works in Africa, it will work anywhere” theory that I expounded upon first here and here.

“Inbox Preview is now launched in Gmail Labs – while Gmail is loading, a simple, static preview of your inbox with your ten most recent messages is displayed. This will allow users like myself to be productive even before Gmail has completed loading.”

A perfect example

Basically, Google realized what slow connections were doing to people’s interaction with their email accounts. So, they sent in a team of engineers to work in cyber cafes in Ethiopia to test out where the bottlenecks were and to come up with a solution.

So, besides building in Africa to serve just African audiences with web specific solutions, we can see solutions coming from Africa that also serve the rest of the world. On top of that you can also use our continent as a testing and R&D grounds for new or improved services.

Last week the BBC interviewed Dr. Diarra, the chairman of Microsoft in Africa. One of his quotes was memorable:

“Africa is really the last frontier in not only developing technology that is specific to people’s needs, but eventually even developing new business models that will enable the emergence of local software industries, such as young people who have the skills to be able to write their own applications for their own community,”

I agree with the first part of that statement, it’s the second part that I find alarming. Coming from Microsoft, how can young people build the skills to write code when they can’t even pay for the closed software needed to run it? It’s not free, and if access (which he states earlier) is the biggest issue facing African technologists – then how does closed software fit into the equation?

Let’s say that the developer communities do emerge even with that hurdle, we’re still left with what one person wrote: “…they will be formed from programmers who are completely dependent on American software for the livelihood: it’s neo-colonialism, pure and simple.” At it’s worst then, African governments are paying for Western products, and are dependent on these large organizations to maintain and support critical systems.

Netzpolitik writes an interesting piece, pointing to a recent WSJ article and talking about how Microsoft positions itself within education and government circles in Africa, thereby cutting off major revenue sources for open source developers and organizations that originate from within the continent.

“Of course, Microsoft does not come for free – the hidden price tag is not just attached to the licensing costs but also to the ownership of innovation and data. Microsoft should be supporting local developments instead of stifling them and dealing with them as competition.”

Monetary and Knowledge Costs

There really are two costs when dealing with software: the expense of buying and maintaining it, and the knowledge cost within the local programming community. The monetary side is a short-term cost relative to the knowledge costs (core competency) that a nation does, or does not, develop over time.

In Africa organizations have a lot of hurdles to overcome, not least of which is the straight cost of doing business. Where it might be simple for some organizations in the US and Europe to wave off a couple thousand dollars worth of licensing fees, the same is not true in Africa. The margins are lower, so every cent counts.

In a region where cost is so important, it’s amazing then that the most lucrative deals go to the Western organizations that have high costs for ownership and maintenance. These outside organizations use backdoor methods to gain contracts where in-country options are available, usually with less expense and with greater local support.

The bigger problem is the knowledge costs, or lack thereof, when closed source organizations muscle into the most lucrative fields. What the country ends up doing is stifling its own programming community. Without money trickling back into that community, its growth is stunted. Instead of young developers learning the fundamentals of coding in open code, they end up going to work in an office that runs proprietary systems.

Ushahidi and Vine

The last year has taught me a great deal about working in the open source space. Not just in developing a tool using these principles, but in helping create a non-profit technology organization focused on open these same fundamentals. That is, we believe that the best use and furtherance of our technology, and our organizations goals, is done with and by the greater community that grows around it. We serve as a focal point from which this community gains energy and to act as a group which is dedicated to the core framework of the tool itself.

Do all situations need and/or require open software? No. In some cases closed-source options are just plain better, which is why I have no problem buying great apps for my PC, Mac or iPhone that make my life easier. I don’t believe that all technology has to be open, though I do think that by keeping it completely closed most companies will be bypassed by their open counterparts in the long run. Good examples of this are the Firefox browser and WordPress blogging platform – possibly Android.

A couple of weeks ago Microsoft announced their new Vine product. It has a lot in common with Ushahidi, including sending and receiving of alerts via SMS and email. To be honest, we have no ownership of this idea, but what we do have is a question as to why Microsoft believes and works to create crisis and emergency systems in a closed way.

Some thoughts from other bloggers on this same issue:

“Crisis reporting is something that wants to be free. It needs to be free, community owned, a service that just exists.”

- Jon Gosier

“There is nothing in Vine that you cannot already do with a combination of Ushahidi’s proximity alerts and the path-breaking SMS based forms updates from FrontlineSMS. Having met with the best and brightest of Microsoft Research, key members of the team behind Vine and the team behind the new version of Sharepoint and Groove, Microsoft have nothing that comes close to the capabilities of FrontlineSMS today with regards to forms based data transfers over SMS in austere conditions, which is precisely what is needed for decision support mechanisms and alerting post-crises.”

- Sanjana Hattotuwa

“The ownership of a crisis reporting system by one company seems unattractive from a consumer as well as a security perspective. It is not unlikely that this will become yet another failed attempt to override instead of collaborate with existing local solutions.”

- Netzpolitik

Unless Microsoft is creating something truly revolutionary, which I don’t see that it is in Vine, then I would rather see them put their development muscle behind something that actually is. It doesn’t even have to be Ushahidi. Finally, if they really are about creating emergency and disaster software for use by normal people, then I would encourage them to not charge for it and to make it as open as possible for others to work with it, including Ushahidi.

[Sidenote: Interestingly enough, the first pre-beta smartphone app that was finished for Ushahidi was the Windows Mobile version. We all chuckled, and then gave a quick dig to the ribs of the devs doing the Android and J2ME apps, to get them going. To us, it didn't matter that it was the service created for our friendly closed-source giant finished first. In the realm that we find ourselves in, crowdsourcing crisis information, it doesn't matter what device you use - it just needs to work.]

(Blue Monster image by Hugh MacLeod)